The Review of the Standards – Preparation for the 4th Round of Mutual Evaluation
Second public consultation
June 2011
Foreword
The FATF has now completed its third round of evaluations, and is currently conducting a review of the 40+9 Recommendations to ensure they remain up-to-date and relevant, and to learn any lessons from implementing and evaluating the current Standards. This is a limited and focused review, seeking to address any deficiencies and emerging threats but to maintain the necessary stability in the Standards as a whole.
Work on this review has been underway for two years, and between October 2010 and January 2011, the FATF undertook a public consultation on the first phase of its review of the FATF Standards. The FATF would like to thank all those who submitted comments. The response to the consultation was very significant, both in terms of the number of submissions received and their content; and the FATF greatly values this input from the private sector and civil society.
Detailed work has continued since then on a second phase of the review of the Standards, and the results of that work are set out in this paper for consultation. The FATF is committed to maintaining a close and constructive dialogue with the private sector, civil society and other interested parties, as important partners in ensuring the integrity of the financial system. Following this consultation we will take the opportunity to have further discussions on the proposed revision of the Standards with the FATF’s Consultative Forum later this year. I look forward to seeing our dialogue lead to stronger, clearer, and more effective FATF Standards.
Luis Urrutia, FATF President
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Showing posts with label Publication. Show all posts
Showing posts with label Publication. Show all posts
on Wednesday, June 27, 2012
Criminals, especially drug traffickers, may have laundered around $1.6 trillion, or 2.7 per cent of global GDP, in 2009, according to a new report by UNODC. This figure is consistent with the 2 to 5 per cent range previously established by the International Monetary Fund to estimate the scale of money-laundering.
Less than 1 per cent of global illicit financial flows is currently being seized and frozen, according to the report Estimating illicit financial flows resulting from drug trafficking and other transnational organized crime. "Tracking the flows of illicit funds generated by drug trafficking and organized crime and analysing how they are laundered through the world's financial systems remain daunting tasks," acknowledged Yury Fedotov, Executive Director of UNODC.
Launching the report in Marrakech, Morocco, during the fourth session of the Conference of the States Parties to the United Nations Convention on Corruption, Mr. Fedotov said that the Conference served as an apt reminder that corruption could play a major role in facilitating the entry of illicit funds into legitimate global financial flows, adding that investments of "dirty money" could distort the economy and hamper investment and economic growth. The aim of the study is to shed light on the total amounts probably laundered across the globe and to advance research on the topic. "But as with all such reports, we will continue to refine the figures to provide the truest possible estimates," said Mr. Fedotov.
The UNODC report estimates that the total amount of criminal proceeds generated in 2009, excluding those derived from tax evasion, may have been approximately $2.1 trillion, or 3.6 per cent of GDP in that year (2.3 to 5.5 per cent). Of that total, the proceeds of transnational organized crime - such as drug trafficking, counterfeiting, human trafficking and small arms smuggling - may have amounted to 1.5 per cent of global GDP, and 70 per cent of those proceeds are likely to have been laundered through the financial system.
The illicit drug trade - accounting for half of all proceeds of transnational organized crime and a fifth of all crime proceeds - is the most profitable sector. The study paid particular attention to the market for cocaine, probably the most lucrative illicit drug trafficked across borders. Traffickers' gross profits from the cocaine trade stood at around $84 billion in 2009. While Andean coca bush farmers earned about $1 billion, the bulk of the income generated from cocaine was concentrated in North America ($35 billion), followed by West and Central Europe ($26 billion). Approximately two-thirds of that total may have been laundered in 2009. The findings suggest that most profits from the cocaine trade are laundered in North America and in Europe, whereas illicit income from other subregions is probably laundered in the Caribbean.
Once illegal money has entered the global and financial markets, it becomes much harder to trace its origins, and the laundering of ill-gotten gains may perpetuate a cycle of crime and drug trafficking. "UNODC's challenge is to work within the United Nations system and with Member States to help to build the capacity to track and prevent money-laundering, strengthen the rule of law and prevent these funds from creating further suffering," said Mr. Fedotov.
Source: UNODC
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on Monday, June 25, 2012
The 12th MENAFATF Plenary Meeting (Doha, State of Qatar, November-December 2010) adopted, based on the TATWG recommendation, the typologies report on "ML/TF Trends and Indicators in the MENA Region" which was prepared by the MENAFATF Typologies Expert Group. The report includes ML/TF trends and indicators in the region; a list of the additional suspicion indicators is attached thereto.
Click here to view the report
Source: MENAFATF
on Sunday, June 24, 2012
KPMG annouces the latest Anti-Money Laundering (AML) survey exploring where AML fits into the changing risk and regulatory landscape facing the financial sector. It reports the views of the survey participants on their areas of focus and challenge, and also contains commentary from KPMG.
- AML is still on the radar of many banks' leadership, but is being squeezed by other priorities.
- AML continues to be a significant and rising expense for banks, but many under-estimate how much it costs.
- PEPs and sanctions are a major focus for banks and governments alike, however both are far from straightforward to get to grips with.
- Transaction monitoring policies and systems are generally seen as satisfactory, but with plenty of room for improvement.
- KYC data is generally collected and updated both robustly and regularly, but there is great variation in the approach used.
DOWNLOAD THE FULL REPORT
on Saturday, June 23, 2012
Banks’ management of high money-laundering risk situations
How banks deal with high-risk customers (including politically exposed persons), correspondent banking relationships and wire transfers
This report describes how banks operating in the UK are managing money-laundering risk in higher risk situations. It focuses in particular on correspondent banking relationships, wire transfer payments and high-risk customers including politically exposed persons (PEPs).
Click here to download
on Friday, June 22, 2012
Barriers to Asset Recovery: An Analysis of the Key Barriers and Recommendations for Action
by: Kevin Stephenson, Larissa Gray, Ric Power
English; Paperback; 200 pages; 7x10
Published June 20, 2011 by World Bank
ISBN: 978-0-8213-8660-6; SKU: 18660
It is estimated that the proceeds of crime, corruption and tax evasion represent between $1 trillion and $1.6 trillion per year, with half coming from developing countries. Proceeds are typically transferred abroad and hidden in foreign jurisdictions, thus requiring international cooperation. Various international conventions and agreements require international cooperation on this issue, in particular the United Nations Convention against Corruption; however, only $5 billion in stolen assets have been repatriated over the last 15 years.
This enormous gap reveals that significant barriers continue to impede asset recovery despite the commitments taken by governments, civil society and the private sector. Drawing on the experience of practitioners with hands-on experience, the Stolen Asset Recovery (StAR) Initiative launched this study to identify the barriers to stolen asset recovery internationally, provide brief analysis of the impact of these barriers, and propose recommendations for overcoming these obstacles. This volume is intended to guide policy makers in their efforts to ensure necessary resources and the development of a plan, policy or strategy aimed at eradicating the barriers to asset recovery. In addition, this study proposes actions to be taken by the G20, international organizations, financial institutions, developmental agencies and civil society.
Click here for more details.
on Tuesday, June 19, 2012
World Bank Group Publishes: Protecting Mobile Money Against Financial Crimes
A guide to delivering mobile banking services to unbanked clients more effectively
The World Bank Group recently released a new book entitled “Protecting Mobile Money Against Financial Crimes: Global Policy Challenges and Solutions.” The book is a guide to preserving the integrity of mobile banking, which is revolutionizing the way financial services are delivered to unbanked clients in rural and remote areas.
Based on fieldwork in eight markets including Kenya, Malaysia, Mexico, the Philippines and Zambia, and research in more than 10 countries including India and South Africa, the book suggests approaches that help mitigate the risks associated with mobile money. Along with guidance on developing effective anti-money laundering and combating the financing of terrorism (AML/CFT) regulatory frameworks, which could give greater financial access to more people, this book assists the industry in conducting sound and objective risk assessments. It is also the first book to provide practical solutions to the challenge of managing weak identification infrastructure and regulating retail mobile money outlets.
The G20 has placed financial inclusion on its priority agenda, to help over two billion adults worldwide who continue to be exploited by predatory lending practices and deprived of access to financial institutions. According to GSMA, which represents the interests of the global communications industry, more than 80 percent of mobile banking services are located in developing markets but more than 1 billion mobile phone users still have no access to formal financial services.
“The opportunity is ripe to replicate the success of services like Kenya’s M-Pesa, which is used by 9 million adults to save and transfer money,” said Pierre-Laurent Chatain, lead author of the book. Since being launched in 2007, mobile banking service M-Pesa has helped over 40 percent of Kenya’s poorest to start saving without incurring bank fees, expand the reach of their small enterprises, and safely send money to relatives in rural areas, boosting consumer spending in the countryside as a result. “However, poorly designed regulatory frameworks can hamper the delivery of mobile money services,” Chatain added.
As mobile money expands even further into countries like the Democratic Republic of Congo, Lesotho and India, the book provides policy makers and industry stakeholders with frameworks that will enable them to deliver mobile banking services to unbanked clients more effectively.
The book is available for sale at: http://publications.worldbank.org.
It can also be downloaded for free on Issuu:
http://issuu.com/world.bank.
It can also be downloaded for free on Issuu:
http://issuu.com/world.bank.
on Monday, June 18, 2012
Abstract: “Financial inclusion” is the delivery of financial services at affordable costs, especially to the disadvantaged and low income populations. Financial inclusion has gained some importance in the last few decades as a result of findings on the impact of “financial exclusion” on development and especially its correlation to poverty.This paper arguesthat access to financial services contributes to human and economic development; and that financial inclusion and effective AML/CFT are complementary to ensure the safety, integrity and soundness of the financial system and the protection of depositors. It calls for the recognition of country specific characteristics of the derived segments of the society, the risks and national priorities in the application of AML/CFT measures, as well as how financial inclusion has been applied with flexible AML/CFT principles. It concludes that inclusive finance does not necessarily mean that everyone who is eligible uses each of the services, but they should be able to choose to use such services if they wish.
by Abdullahi Y. Shehu
Dr. Shehu is Director General of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). GIABA is a Specialized Institution of the Economic Community of West African States (ECOWAS), as well as a Financial Action Task Force (FATF) Style Regional Body (FSRB) with its Headquarters in Dakar, Senegal.
Click HERE for the Full Article publised at The Journal of Crime, Law and Social Change
on Thursday, June 14, 2012
Price: $59.95
Cat. #: K11399
ISBN: 9781439828502
ISBN 10: 1439828504
Publication Date: July 30, 2010
Number of Pages: 175
Binding(s): Paperback
Summary: Using the Balanced Scorecard method for assessment, this book explores the effectiveness of a government’s financial intelligence units in combating terrorist financing. It explores the large-scale misuse of funds to commit financial crimes, describes how easy it is for criminals, and reviews the inter-jurisdictional problems involved. Contributions from politicians, government policy analysts, auditors, regulators, police officers, lawyers, bankers, and academics provide various perspectives. Case studies demonstrate innovative solutions and crime fighting strategies. Although focused on the U.S., Canada, Australia, The European Union, the UK, Spain, and Holland, the strategies apply to all countries.
Source: CRC Press
on Tuesday, June 12, 2012
Abstract: Globally, terrorism is known to involve the use of violence and threats to intimidate or coerce, especially for political purposes; it is a criminal act that influences an audience beyond the immediate victim. It is out of place that despite the destructiveness of this cruel and evil crime, there is yet to be a globally agreed upon definition for it and this poses problem for the entire international community. This paper states different definitions of terrorism as given by international organisations, states and individuals. It goes further to analyse the different features common to the various definitions of terrorism. Further to this, the paper highlights the obstacles to having a globally agreed upon definition of terrorism and finally states the benefits of having such an agreed upon definition of terrorism.
Click HERE for the FULL ARTICLE
Source: Ozean Journal of Social Sciences 4(3), 2011, 139
Department of General Studies, Federal Polytechnic, Ede, Nigeria
on Saturday, June 9, 2012
Summary: Tracking funding is a critical part of the fight against terrorism and as the threat has escalated, so has the development of financial intelligence units (FIUs) designed to investigate suspicious transactions. Terrorist Financing, Money Laundering, and Tax Evasion: Examining the Performance of Financial Intelligence Units provides a thorough analysis of the financing phenomenon from the raising of funds to government agencies’ efforts to interdict them to measuring and monitoring the outcomes of these efforts.
This volume begins by presenting deep-rooted conflicts in the Middle East, the United States, the Indian subcontinent, Northern Ireland, and South America that have led to modern terrorism. It describes recent developments in counterterrorism and discusses the next steps in intelligence reform. Next, the author discusses how financial crime is committed, examining the source of funds from money laundering and tax evasion among others, and the transfer of these funds. He then covers performance and risk management, and the process of measuring performance using the balanced scorecard method. The book presents an overview of anti-money laundering and counterterrorist financing initiatives in several regions around the globe: the European Union, Asia Pacific, North America, Latin America and the Caribbean, the Middle East, and Africa. It concludes with a survey of experts’ opinions on the efficacy of current programs and recommendations for improving government performance in countering terrorist financing and related money laundering and tax evasion.
Knowing what to target and how to measure results are essential for performance enhancement in preventing and interdicting financial criminal activity. Establishing the need for accurate assessment of the success and failure of FIUs, the book demonstrates how monitoring and measuring progress is a crucial part of financial interdiction efforts in the fight against terrorism.
About the Aouthor: Jayesh D’Souza is a doctoral graduate from Florida International University’s Public Administration Program. Mr. D’Souza is a specialist in public policy, finance, and economics and has a number of publications and presentations in governmental financial performance, counterterrorism, economic development, energy and the environment, education, and health care. His past employers include the Government of Ontario and T. D. Waterhouse
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on Saturday, June 2, 2012
The misuse of NPO-generated funds may occur in a number of ways. First, funds may be collected in the name of a legitimate NPO but be disbursed for terrorists rather than altruistic causes. Second, an NPO may be used to launder money or provide legitimate means for the transmission of funds between multiple locations. Third, funds may be misused by the recipients themselves. In any of these scenarios, the NPO may or may not be complicit in or aware of the abuse being committed. There could also be a misuse of NPO vehicles and property to transport or house terrorist operatives, money, and weapons. From the publicly available evidence, there is little to suggest that there is substantial misuse of NPOs for ML/TF. Case studies have shown that opportunities exist and are exploited for ML/TF, but the number of published cases studied is still relatively small. This could suggest that the prevalence of ML/TF misuse is itself low. Conversely, it could indicate there are low detection rates for this kind of illegal activity. The majority of the cases detected involved either the establishment of a sham NPO, in every case a charity, or the exploitation of a legitimate entity to raise, transfer, distribute, or launder funds. The current Australian regulatory regime for the nonprofit sector does not have an overt emphasis on ML/TF issues, although the encapsulation of designated services used by the NPOs under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 does afford good protection.
Author: Samantha Bricknell
Publication Date: 09/2011
Click here to download the Publication
Money laundering is the process by which large amount of illegally obtained money, from drug trafficking, Terrorist activity or other serious crimes, is given the appearance of having originated from the legitimate source. Money laundering has an adverse impact on economy and political stability of country and hence such an activity must be curbed with an iron hand. Therefore, nations of the world must join hands and adopt measures to dismantle syndicates engaged in money laundering by resorting to aggressive enforcement of law. An attempt has been made in this article to explain the Concept, Significance and its impact.
European Journal of Business and Management
by Vandana Ajay Kumar, Department of Laws, Panjab University, ChandigarhDownload the FULL ARTICLE
on Friday, June 1, 2012
Billions in corrupt assets, complex money trails, strings of shell companies and other spurious legal structures. These form the complex web of subterfuge in corruption cases, behind which hides the beneficial owner- the Puppet Master and beneficiary of it all.
Linking the beneficial owner to the proceeds of corruption is notoriously hard. With sizable wealth and resources on their side, they exploit transnational constructions that are hard to penetrate and stay aggressively ahead of the game.
Nearly all cases of grand corruption have one thing in common. They rely on corporate vehicles- legal structures such as companies, foundations and trusts -- to conceal ownership and control of tainted assets.
The Misuse of Corporate Vehicles takes these corporate vehicles as its angle of investigation. It builds upon cases, interviews with investigators, corporate registries and financial institutions, as well as a 'mystery shopping' exercise that provide factual evidence of a criminal practice. This approach is used to understand the nature of the problem and design policy recommendations to facilitate the investigative process by unraveling the complex world of CVs.
This lucidly written report is solidly built on step-by step arguments and designed to deliver practical, applicable and well substantiated recommendations. It is intended for use by policy makers in developing national legislation and regulation as well as international standard setters. It also provides helpful information for practitioners engaged in investigating corrupt officials and academics involved in the study of financial crime.
Download the FULL REPORT
Source: World Bank
on Tuesday, February 28, 2012
Additionally, a considerable number of transactions are conducted electronically and across international borders. All these characteristics make the securities sector attractive to those who would abuse it for illicit purposes.
This FATF study describes (i) how criminals might be able to use securities firms to launder money and finance terrorism and (ii) how illicit funds can be generated through fraudulent activities.
The report contains case studies that illustrate the risks associated with the various types of intermediaries, products, payment methods and clients involved in the securities industry. It also identifies that some areas of vulnerability are not necessarily unique to the securities industry: indeed, some money laundering schemes involve types of products and transaction that exist in the banking and insurance sectors as well.
Suspicious transaction reporting in the sector remains relatively low, which appears to be explained by a number of factors, including a lack of awareness and insufficient securities-specific indicators and case studies.
Download the report
Source: FATF
on Wednesday, February 15, 2012
Preventing Money Laundering and Terrorism Financing: A Practical Guide for Bank Supervisors
by Pierre-Laurent Chatain , John McDowell , Cedric Mousset , Paul Allan Schott , Emile Van der Does
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Price: $ 39.95
English Paperback 300 pages 7 x 10
Published May 2009 by World Bank ISBN: 0-8213-7912-7 ISBN-13: 978-0-8213-7912-7 SKU: 17912
The current financial crisis poses many challenges to all countries and is having a significant impact on economies and societies throughout the world. The need for funds might lower financial institutions’ vigilance as to the provenance of those funds. Supervisors also might prudently be focusing on coping with the crisis, affecting their supervision of measures for anti-money laundering and combating the financing of terrorism (AML/CFT). It will take increased efforts to ensure that AML/CFT concerns remain a priority for both banks and their supervisors.
Effective supervision is central to the success of a country’s AML/CFT system. However, fieldwork in both developed and developing countries has shown an overall low compliance in the supervision of banks and other financial institutions. In fact, supervisory compliance with AML/CFT recommendations is generally lower than the average level of compliance with other recommendations of the Financial Action Task Force (FATF). By providing examples of good practices, Preventing Money Laundering and Terrorist Financing will help countries improve AML/CFT supervision in the banking sector.
This practical guide supports the implementation of international standards established by the FATF and other bodies by providing examples of AML/CFT supervisory regimes in both developed and developing countries, describing the implementation of good practices in AML/CFT supervision and enforcement, and giving practical advice on how a particular jurisdiction might incorporate AML/CFT into its supervisory regime.
Designed specifically for bank supervisors, this guide will also be of interest to readers working in the areas of finance, corruption prevention, law, accounting, and corporate governance.
Table of Contents
Endorsements
"...this is a fantastic book, very resourceful and a must read for all." Razim Buksh, Director, Fiji Financial Intelligence Unit
Introduction
Chapter 1. Designing an Effective AML/CFT Supervisory Framework
1. Overview
2. The Importance of AML/CFT to Policy Makers and Supervisors
3. Demonstrated Political Will Is the Key to Success
4. Importance of Collaboration and Cooperation
5. Organizational Approaches for Effective AML/CFT Supervision
6. Principles for an Effective AML/CFT Supervisory Framework
Chapter 2. Risk Management in Combating Money Laundering and Terrorist Financing
1. Overview
2. Introduction to Money Laundering/Terrorist Financing Risk Management
3. Overview of the Risks Associated with Money Laundering, Terrorist Financing, and Related Compliance Issues
4. The ML/FT Risk Assessment Process from the Bank Perspective
5. Expected Outcomes of the ML/FT Risk Assessment
Chapter 3. The Licensing Process and AML/CFT Due Diligence
1. Overview
2. Summary of the Licensing Requirements for Banks
3. Considerations for an Effective Licensing Process
Chapter 4. AML/CFT Off-Site Supervision
1. Overview
2. Main Features of the Off-Site Supervision System
3. Key Tasks to Be Performed by Off-Site Examiners
4. Other Responsibilities of Ongoing Supervision
Chapter 5. The On-Site Supervisory Process
1. Overview
2. Examination Issues and Approaches
3. Planning and Preparing for the AML/CFT On-Site Examination
4. Overview of the Key Areas to Be Assessed
5. Preparing the Examination Report
Chapter 6. Sanctions and Corrective Measures to Be Taken by Competent Authorities
1. Overview
2. General
3. Summary of Possible Rulings and Remedial Measures
4. Examples of Enforcement and Sanctions Applied in Several Countries
5. General Overview of the Basic Requirements for Effective Sanction Proceedings
Chapter 7. National and International Cooperation
1. Overview
2. The Importance of Cooperation
3. National Cooperation
4. International Cooperation
Source. IMF
by Pierre-Laurent Chatain , John McDowell , Cedric Mousset , Paul Allan Schott , Emile Van der Does
English Paperback 300 pages 7 x 10
Published May 2009 by World Bank ISBN: 0-8213-7912-7 ISBN-13: 978-0-8213-7912-7 SKU: 17912
The current financial crisis poses many challenges to all countries and is having a significant impact on economies and societies throughout the world. The need for funds might lower financial institutions’ vigilance as to the provenance of those funds. Supervisors also might prudently be focusing on coping with the crisis, affecting their supervision of measures for anti-money laundering and combating the financing of terrorism (AML/CFT). It will take increased efforts to ensure that AML/CFT concerns remain a priority for both banks and their supervisors.
Effective supervision is central to the success of a country’s AML/CFT system. However, fieldwork in both developed and developing countries has shown an overall low compliance in the supervision of banks and other financial institutions. In fact, supervisory compliance with AML/CFT recommendations is generally lower than the average level of compliance with other recommendations of the Financial Action Task Force (FATF). By providing examples of good practices, Preventing Money Laundering and Terrorist Financing will help countries improve AML/CFT supervision in the banking sector.
This practical guide supports the implementation of international standards established by the FATF and other bodies by providing examples of AML/CFT supervisory regimes in both developed and developing countries, describing the implementation of good practices in AML/CFT supervision and enforcement, and giving practical advice on how a particular jurisdiction might incorporate AML/CFT into its supervisory regime.
Designed specifically for bank supervisors, this guide will also be of interest to readers working in the areas of finance, corruption prevention, law, accounting, and corporate governance.
Table of Contents
Endorsements
"...this is a fantastic book, very resourceful and a must read for all." Razim Buksh, Director, Fiji Financial Intelligence Unit
Introduction
Chapter 1. Designing an Effective AML/CFT Supervisory Framework
1. Overview
2. The Importance of AML/CFT to Policy Makers and Supervisors
3. Demonstrated Political Will Is the Key to Success
4. Importance of Collaboration and Cooperation
5. Organizational Approaches for Effective AML/CFT Supervision
6. Principles for an Effective AML/CFT Supervisory Framework
Chapter 2. Risk Management in Combating Money Laundering and Terrorist Financing
1. Overview
2. Introduction to Money Laundering/Terrorist Financing Risk Management
3. Overview of the Risks Associated with Money Laundering, Terrorist Financing, and Related Compliance Issues
4. The ML/FT Risk Assessment Process from the Bank Perspective
5. Expected Outcomes of the ML/FT Risk Assessment
Chapter 3. The Licensing Process and AML/CFT Due Diligence
1. Overview
2. Summary of the Licensing Requirements for Banks
3. Considerations for an Effective Licensing Process
Chapter 4. AML/CFT Off-Site Supervision
1. Overview
2. Main Features of the Off-Site Supervision System
3. Key Tasks to Be Performed by Off-Site Examiners
4. Other Responsibilities of Ongoing Supervision
Chapter 5. The On-Site Supervisory Process
1. Overview
2. Examination Issues and Approaches
3. Planning and Preparing for the AML/CFT On-Site Examination
4. Overview of the Key Areas to Be Assessed
5. Preparing the Examination Report
Chapter 6. Sanctions and Corrective Measures to Be Taken by Competent Authorities
1. Overview
2. General
3. Summary of Possible Rulings and Remedial Measures
4. Examples of Enforcement and Sanctions Applied in Several Countries
5. General Overview of the Basic Requirements for Effective Sanction Proceedings
Chapter 7. National and International Cooperation
1. Overview
2. The Importance of Cooperation
3. National Cooperation
4. International Cooperation
Source. IMF
on Sunday, January 22, 2012
Combating Money Laundering and the Financing of Terrorism: A Comprehensive Training Guide by World Bank , International Monetary Fund
Price: $ 75.00
Coming Soon!
English 774 pages
Published February 2009 by World Bank ISBN: 0-8213-7569-5 ISBN-13: 978-0-8213-7569-3 SKU: 17569
If you wish to preorder this title please complete our order form and fax it to +1-703-661-1501.
Combating Money Laundering and the Financing of Terrorism: A Comprehensive Training Guide has been developed by the Financial Market Integrity Unit of the World Bank to support the World Bank’s Capacity Enhancement Program on AML/CFT. The modules are comprised of the following eight Modules:
Module 1 - Effects on Economic Development and International Standards
Module 2 - Legal Requirements to meet International Standards
Module 3a - Regulatory and Institutional Requirements
Module 3b - Compliance Requirements for Financial Institutions
Module 4 - Building an Effective Financial Intelligence Unit
Module 5 - Domestic (inter-agency) and International Cooperation
Module 6 - Combating the Financing of Terrorism
Module 7 - Investigating Money Laundering and Terrorist Financing
The program offers countries the tools, skills and knowledge to build and strengthen their institutional, legal and regulatory frameworks for developing a robust AML/CFT regime.
Source: The World Bank Group
Price: $ 75.00
Coming Soon!
English 774 pages
Published February 2009 by World Bank ISBN: 0-8213-7569-5 ISBN-13: 978-0-8213-7569-3 SKU: 17569
If you wish to preorder this title please complete our order form and fax it to +1-703-661-1501.
Combating Money Laundering and the Financing of Terrorism: A Comprehensive Training Guide has been developed by the Financial Market Integrity Unit of the World Bank to support the World Bank’s Capacity Enhancement Program on AML/CFT. The modules are comprised of the following eight Modules:
Module 1 - Effects on Economic Development and International Standards
Module 2 - Legal Requirements to meet International Standards
Module 3a - Regulatory and Institutional Requirements
Module 3b - Compliance Requirements for Financial Institutions
Module 4 - Building an Effective Financial Intelligence Unit
Module 5 - Domestic (inter-agency) and International Cooperation
Module 6 - Combating the Financing of Terrorism
Module 7 - Investigating Money Laundering and Terrorist Financing
The program offers countries the tools, skills and knowledge to build and strengthen their institutional, legal and regulatory frameworks for developing a robust AML/CFT regime.
Source: The World Bank Group
on Thursday, January 19, 2012
New Publication: Europe and Transnational Terrorism
The terrorist attacks in Madrid and London underlined the fact that Europe is not spared from transnational jihadist terror and that its counter-terrorist efforts cannot be confined to remote regions like Afghanistan. On the contrary, European countries have become battle zones in a struggle that will remain a central moment of international relations in the years to come. This struggle poses a number of new challenges in diverse fields such as banking, information and communication technologies, or judicial co-operation and even though terrorism is no new phenomenon within the shores of Europe, both the Union and its member states have been struggling to find adequate approaches to it. In the edited book “Europe and Transnational Terrorism” a number of leading experts in the field of terrorism research assess the threat to Europe and analyze counter-terrorist policies at Union and member state level. The articles cover the threat of al-Qaeda and homegrown jihadist networks, the risk of terrorist attacks with weapons of mass destruction, the counter-terrorist policies of Great Britain and Germany, transatlantic co-operation in home-land security, the Union’s efforts to combat terrorist financing, and the possibility of deterring terrorist acts.
Contents
The terrorist attacks in Madrid and London underlined the fact that Europe is not spared from transnational jihadist terror and that its counter-terrorist efforts cannot be confined to remote regions like Afghanistan. On the contrary, European countries have become battle zones in a struggle that will remain a central moment of international relations in the years to come. This struggle poses a number of new challenges in diverse fields such as banking, information and communication technologies, or judicial co-operation and even though terrorism is no new phenomenon within the shores of Europe, both the Union and its member states have been struggling to find adequate approaches to it. In the edited book “Europe and Transnational Terrorism” a number of leading experts in the field of terrorism research assess the threat to Europe and analyze counter-terrorist policies at Union and member state level. The articles cover the threat of al-Qaeda and homegrown jihadist networks, the risk of terrorist attacks with weapons of mass destruction, the counter-terrorist policies of Great Britain and Germany, transatlantic co-operation in home-land security, the Union’s efforts to combat terrorist financing, and the possibility of deterring terrorist acts.Contents
on Tuesday, April 27, 2010
Risks of money laundering and the financing of terrorism arising from alternative remittance systems
Transnational crime brief no. 7
ISSN 1835-8446
Canberra: Australian Institute of Criminology, April 2010
Abstract
The events of 11 September 2001 have heightened interest in ensuring that all sectors of the financial system are not misused either by criminal or terrorist groups. In addition to conventional banks, money and value can be transferred by alternative remittance providers who have, until recently, not been closely regulated. Regulators are concerned that the informal nature of these businesses may lead to their use by terrorist groups and other criminals. This brief considers the characteristics of alternative remittance businesses, the risks they pose and some of the current responses to these risks. The Australian Institute of Criminology (AIC) has published more detailed work in this area through its Research and public policy series and its Trends & issues series.
Definition
'Alternative remittance' is only one of a number of terms used to describe the practice of transferring value, including money, from one country to another. It is generally used where value is sent through 'informal' channels, as distinct from conventional banks. Terms used in other jurisdictions include hundi, hawala, poe kuan, informal funds transfer, underground banking, parallel banking, informal funds transfer and money/value transfer.
None of these terms are precise because these practices often intersect with the formal banking structure. Further, they are often not an alternative service because in some countries, such as Somalia and Afghanistan, the remittance system has been the only financial system available for long periods of time. In many countries, including Australia, alternative remittance services (ARS) are legal and widely advertised. In jurisdictions such as India, they are illegal for a number of reasons, including the prevention of currency speculation, the prevention of capital flight and their role in domestic terrorism.
The remittance system pre-dates modern banking and arose in various locations including China, southeast Asia and the Middle East where there was a need to move value without taking the risk of physically moving money itself. At its most basic, a remittance service involves a sender, a beneficiary and two intermediaries. The sender wishes to send a remittance to the beneficiary, often in the country of origin where the sender previously resided. This transaction would be organised by the first intermediary, an ARS provider, who would generally charge a commission for this service.
An instruction to transfer money/value would be sent to another ARS provider who would then provide cash or other value to the beneficiary. No money would actually move in the course of the transaction; the second ARS provider would pay the beneficiary out of his or her own available funds and so the first ARS provider would owe the second provider a debt. Instructions would be conveyed through a written message (sometimes called a chit) or nowadays via telephone, fax or email. However, the reality is far more complicated as there are often multiple transactions and intermediaries, requiring various accounts to be balanced.
Types of remittance providers
Remittance providers differ enormously in their characteristics. There are a number of large companies that provide money transfer services to anywhere in the world. These organisations are part of the conventional financial system insofar as they obey the laws of all the countries they operate in.
However, many ARS providers send remittances to only one country (and often only to one ethnic community). There are concerns that some of these ARS providers do not always abide by the laws of the countries in which they operate.
Communities use ARS for a number of reasons. First, the services offered by such providers are often cheaper, quicker and more reliable than services provided by conventional banks and corporate remitters. ARS providers are also capable of delivering remittances to remote rural areas. ARS providers may also have family connections (or at least long standing social and cultural links) to many of the people for whom they provide a remittance service and are trusted members of the community. By way of contrast, many people from ethnic communities may not trust formal banking institutions due to previous unpleasant experiences in their country of origin (Zagaris 2007).
Alternative remittance and criminal/terrorist activity
There are cases of ARS providers being actively involved in criminal or terrorist-based activity but it is difficult to estimate how common such activity is. Aspects of alternative remittance businesses have lent themselves to use by criminal or terrorist elements in a variety of ways (AUSTRAC 2009a; Passas 2008). First, due to the number of transactions and intermediaries and the fact that alternative remittance businesses are illegal in some countries, each transaction does not always have a single coherent set of documentation which identifies the receiver of the remittance. Second, alternative remittance businesses have not always been obliged to identify their customers and may receive instructions over the phone, so they may not always know for whom they are acting. Third, the use of intermediaries and the possible consolidation of remittances into one sum means that money is coming in from many sources and no one person or organisation may have responsibility for knowing the identity of all these sources. Finally, there is the possibility that some providers could be a front for criminal organisations, or that both providers and users may unwittingly be involved in illegality.
Case 1: Liaquat Ali, Akhtar Hussain and Mohsan Khan Shahid Bhatti v R [2005] EWCA Crim 87
In 2008, 11 people were sentenced to terms of imprisonment after being convicted of money laundering involving the use of three travel firms based in Bradford, United Kingdom. An investigation conducted by Her Majesty's Revenue and Customs found that these firms had used alternative remittance mechanisms to illegally launder millions of pounds, much of which had been derived from drug trafficking. The investigation relied on evidence from a range of sources, including reports from financial institutions reporting large transactions by the three businesses, and surveillance showing large sums of cash being dropped off at the firm's branches in Yorkshire. Estimates of the amount of money involved ranged up to £500m.
Case 2: A Ansari v R, H Ansari v R [2007] NSWCCA 204
In this case, the Ansari brothers ran a Sydney-based remittance business called Exchange Point. Exchange Point received cash deposits from Australian customers which they placed in a cash pool. The Ansaris would then instruct associates to make equivalent sums available to these Australians when they travelled overseas.
The Ansaris simultaneously received instructions from overseas regarding the payments of funds into Australian accounts. They used the cash pool to make these payments, which were often made in sufficiently small amounts to avoid Australian reporting requirements. The negotiations regarding these transactions were conducted over mobile phones and no records were kept.
The Ansari brothers were convicted of offences under the Criminal Code 1995 (Cth) relating to money laundering.
The regulation of alternative remittance service providers
As a result of 11 September 2001 terrorist attacks, countries have made greater effort to increase the security of the financial system. As a response to these events, the Financial Action Task Force (FATF), which was originally set up in 1989 by the G-7 Summit to combat money laundering, turned its attention to the prevention of financing of terrorism.
In 2003, one of the main recommendations made by FATF was that jurisdictions should institute a licensing or registration system for any organisation or person providing a money service business, including remittance services. The key difference between licensing and registration is that licensing implies that the regulatory body has inspected and sanctioned the particular operator, whereas registration means that the operator has simply been placed on the regulator's list of operators.
Countries currently regulate ARS providers in a variety of ways. The regimes employed range from outright prohibition of the practice, through to variations in licensing regimes (which can include a 'fit and proper' test to determine whether someone is suitable to own or manage an ARS business), to various forms of registration. Debate continues as to what is the most appropriate regulatory method.
Australia has enacted the Anti Money Laundering and Counter Terrorism Financing Act 2006 (Cth) which requires the registration of those providing such services.
On 4 November 2009, AUSTRAC issued its first remedial direction to an ARS provider. This arose because of non-compliance with AML/CTF legislation by failing to have an effective AML/CTF program in place. Under the terms of the remedial direction, the non-compliant provider is now required to submit to AUSTRAC an AML/CTF program that assesses its exposure to AML/CTF risks and in doing so, takes account of issues such as the types of customers dealt with, the services offered, its methods of delivering these services and the foreign jurisdictions it deals with in the course of its business. The remedial direction stipulated that the provider is to perform background checks on staff and train staff regarding relevant AML/CTF risks and identification and verification requirements (AUSTRAC 2009b).
FATF also recommended that ARS providers should abide by the same laws as conventional banks. FATF has stated that regulation should not be excessively legalistic or heavy handed and that it should avoid the risk of driving the industry 'underground' (FATF-GAFI 2003).
Conclusion
ARS is vital to many individuals and of considerable importance to the economies of a number of countries. Since 11 September 2001, they have become subject to far greater regulation than previously experienced. Further research on the links between ARS and serious crime is warranted to ensure that the regulatory responses are proportionate and effective.
References
AUSTRAC 2009a. Typologies and case studies report. Sydney: AUSTRAC
AUSTRAC 2009b. Remedial directions. http://www.austrac.gov.au/remedial_directions.html
FATF-GAFI 2003. Combating the abuse of alternative remittance systems: international best practices. Paris: OECD
Passas N 2008. Dirty money? Tracing the misuse of hawala networks. Jane's intelligence review March: 40–45
Zagaris B 2007. Problems applying traditional anti-money laundering procedures to non-financial transactions, 'parallel banking' systems and Islamic financial systems. Journal of money laundering control 10(2): 157–169
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